U.S. cargo airline Southern Air said Friday it has filed for protection under Chapter 11 of the federal bankruptcy laws, citing “economic challenges and extreme industry changes
that have impacted the international freight market, including major
cutbacks in spending by the U.S. Department of Defense.”
It said it had reach a deal with its lenders to restructure its balance sheet and significantly reduce by more than two-thirds its approximately $285 million of legacy debt.
“The improved capital structure is a key component of the company’s transformation into a carrier better positioned both financially and operationally to compete in a dynamic and challenging global marketplace,” the Norwalk, Conn.-based firm said.
“The actions we are taking will dramatically change and improve our capital structure, eliminating the substantial cost burden of legacy debt and other costs from our acquisition in 2007,” said Daniel J. McHugh, chief executive officer.
Southern Air was acquired by Oak Hill Capital Partners in 2007.
McHugh said the decision to file for bankruptcy protection “follows our operational transition over the past 18 months from a high-maintenance and labor-intensive fleet, to a modern, fuel-efficient fleet of 777s and 747-400s serving global customers and operating in more reliable, lower cost route structures in key global trade lanes
In April, the company added its fourth Boeing 747 freighter and, according to its Website, also has in its fleet 10 747-200 and four 747-400 all-cargo planes.
“The next component of our transformation is the restructuring of our corporate debt and other costs associated with our acquisition in 2007. With an improved balance sheet, Southern Air will have a greater capacity to move forward as a global air cargo industry leader on a financially stronger and more competitive foundation for the long term,” the company said.
Founded in 1947, Southern Air provides air cargo charters, so-called ACMI (aircraft, crew, maintenance and insurance) services, on-demand charters and humanitarian relief flights. - Chris Dupin